MOHAMMAD ATHER SAEED, J. - These Income Tax Reference Applications have been filed against the order of the Tribunal dated 23.10.2009 in ITAs No. 413/KB and 414/KB of 2008. The following questions said to have arisen from the said order have been proposed for the opinion of this Court:-
(1) Whether under the facts and circumstances of the case the learned Tribunal was justified in upholding the order of the learned Commissioner (Appeals) deleting the demand under Sections 147 and 205 of the Income Tax Ordinance, 2001, without incorporating the arguments of the Departmental Representative or giving any reasons of its own?
(2) Whether in view of the facts and circumstances of the case the option of paying Advance Tax on estimate basis by a Company is exercisable under sub-section (4A) of Section 147 of the Income Tax Ordinance, 2001, only when the tax payable is more than the amount required to be paid?
2. On 23.11.2010, after hearing the learned counsel in Court vide our short order we had refrained the question to read as under:- Whether in the facts and circumstances of the case, the Tribunal was justified in holding that the case of a company also fell within the ambit of sub-section (6) of Section 147?
And answered the above question in affirmative in favour of the respondent and against the applicant and dismissed both the reference applications in limine.
3. The following are the reasons in support of our above short order.
4. Brief facts of the case are that the respondent a private limited company had filed an estimate under subsection (6) of Section 147 as it had estimated that its actual tax liability will be. Less than the advance tax liability computed under Section 147(1) read with Section 147(4) and therefore had recomputed its liability on the basis of above estimate and paid advance tax accordingly. After issuing a show-cause notice under Section 147(7) of the Income Tax Ordinance, 2001 the Assessing Officer after holding that the present respondent did not fall within the ambit of Section 147(6) but fell under the provisions of Section 147(4-A) levied advance tax payable for the third and fourth quarters at Rs. 106,793,492/- and additional tax under Section 205 amounting to Rs. 2,323,861/-.
5. Being aggrieved by the above order the respondent filed appeals before the Commissioner of Income Tax (Appeals) who vide his order No. 78 and 79, dated 31.03.2008 allowed the appeals and deleted the advance tax and the additional tax.
6. Aggrieved by the above order the present applicant filed appeals before the Tribunal who dismissed it vide the impugned order. Hence these reference applications.
7. We have heard Mr. Ali Mumtaz Shaikh the learned counsel for the applicant and Mr. Ali Almani, Advocate for the respondent.
8. The main contention of the learned counsel for the applicant is that the case of the company who filed estimate, falls under the provisions of sub-section (4-A) of Section 147 and not under sub-section (6) of Section 147 because according to the learned counsel if the case of the respondent fell within the ambit of one sub-section then their case would have automatically been excluded from the ambit of other sub-sections. He submitted that sub-section (4-A) of .Section 147 has to be read with sub-section (4) which provides the method for computation of advance tax in respect of an association of persons or a company in accordance with a particular formula and since companies fall under sub-section (4) therefore -in accordance with the provisions of sub- section (4-A), the companies were required to file estimate of the amount of tax payable by them and pay such amount if at any time before the last installment is due they estimated that the tax payable by them is likely to be more than the amount they were required to pay under sub-section (4). He submitted that sub-section (4-A) does not provide the corporate taxpayer the option to file and pay the taxes in accordance with estimate filed by him if he estimates that his tax is going to be less than the tax payable by him in accordance with sub-section (4). The learned counsel submits that those taxpayers who fall under subsection (4-A) will not fall under sub-section (6) which provides that any taxpayer who estimates at any time before the last installment is due that the tax payable by him for the relevant tax year is likely to be less than the amount required to be paid under sub-section (1), shall estimate and pay the tax on the basis of such estimate as he does not fall within the ambit of this Section but fall under sub-section (4-A). He therefore prayed that the questions proposed may be answered in his favour and the orders of the lower appellate forums be vacated.
9. Mr. AN Almani the learned counsel for the respondent opposed the arguments of the learned counsel for the applicant and submitted that the scheme of Section 147 is that all taxpayers are required to pay advance tax in accordance with the provisions of sub-section (1) of Section I47 subject to the provisions of sub-section (2). He said that the formula on the basis of which such advance tax is payable has been provided for corporate taxpayers and AOPs by sub-section (4-A) and the formula for the payment of advance tax by individuals has been provided in subsection (4-B). He submitted that sub-section (6) has provided a benefit to all taxpayers who are required to make payment of advance tax under sub-section (1) that if they estimate at any time before the last installment is due, that the tax payable by them for the relevant tax year is likely to be less than the amount they are required to pay under sub-section (1) they may file an estimate of such tax and pay such tax accordingly. He submitted that if the arguments of the learned counsel for the appellant are to be accepted, then sub-section (6) will become redundant as the basis of computation of tax of none of the taxpayer is provided under sub-section (1) but the same has been provided under subsection (4) and sub-section (4-B). He submits that when such a situation arises it is the duty of the Courts to arrive at a harmonious interpretation of both the Sections so that none of them is rendered redundant and reading the two sub-sections together to arrive at a harmonious interpretation will lead to the conclusion that' the corporate taxpayers or AOPs are liable to file estimates under subsection (4A), if they estimate that tax payable by them will be higher than the tax computed as payable by them under subsection (4) but all categories of taxpayers will be entitled to file estimate of advance tax payable by them if they estimate that the tax payable by them will be less than the tax computed by them under sub-section (1) read with subsection (4) or with sub-section (4-B). He drew our attention to the previous history of the legislation and submitted that the para materia Section of the repealed Income Tax Ordinance, 1- 979 which was Section 53 and repealed Income Tax Act, 1922 which was Section 18 also provided the benefit of filing a estimate when the taxpayer estimated that his tax is likely to be less than the tax payable by him under these provisions and pay tax accordingly whereas the requirement to file estimate if the tax payable is estimated to be higher than the tax required to be paid under the provisions of Section 147 has been brought in the statute for the first time. He also submitted that the question of law has not been properly framed as the Tribunal has decided that the companies also fall within the ambit of Section 147(6).
10. We have examined the case in the light of the arguments of the learned counsel and have perused the records of the case and the relevant law on the subject. Before we proceed further it will be appropriate to reproduce sub-sections (1), (4), (4-B) and sub-section (6) of Section 147.
Section 147 Advance tax paid by the taxpayer.-(1) Subject to sub-section (2), every taxpayer whose income was charged to tax for the latest tax year under this Ordinance or latest assessment year under the repealed Ordinance other than--- (A)********
(b) income chargeable to tax under Sections 5, 6 and 7;
(ba) income chargeable to tax under Section 15;
(c) income subject to deduction of tax at source under Section 149; and
(ca) *********** (d)income from which tax has been collected under division II or deducted under division III or deducted or collected under Chapter XII and for which no tax credit is allowed as a result of sub- section (3) of Section 168, shall be liable to pay advance tax for the year in accordance with this Section.
(2) This Section does not apply to an individual where the individuals latest assessed taxable income excluding income referred to in clauses (a), (b), (ba), (c) and (d) of sub-section (1) is less than five hundred thousand rupees.
(3) *********
(4) Where the taxpayer is an association of persons or a company, the amount of advance tax due for a quarter shall be computed according to the following formula, namely:- (A x B/C) - D where A. , is the taxpayer's turnover for the quarter; B. Is the tax assessed to the taxpayer for the latest tax year; C. Is the taxpayer's turnover for the latest tax year; and D. Is the tax paid in the quarter for which a tax credit is allowed under Section 168, other than tax deducted under Section ' 155.
(4A) any taxpayer who is required to make payment of advance tax in accordance with sub- section (4) , shall estimate the tax payable by him for the relevant tax year, at any time before the last installment is due. In case the tax payable is likely to be more than the amount he is required to pay under sub-section (4), the amount of the tax payable by him and thereafter pay such amount after making adjustment for the amount if any already paid in terms of sub-section (4). '
(4B) Where the taxpayer is an individual having latest assessed income of five hundred thousand rupees or more as determined under Section (2), the amount of advance tax due for a quarter shall be computed according to the following formula, namely (A/4)-B where A. Is the tax assessed to the taxpayer for the latest tax year or latest assessment year under the repealed Ordinance; and B. Is the tax paid in the quarter for which a tax credit is allowed under Section 168, other' than tax deducted under Section. . 149 or 155.
(6) If any taxpayer who is required to make / payment of advance tax under sub-section (1) ." estimates at any time before the last installment is due, that the tax payable by him for the..' relevant tax year is likely to be less than the. Amount he is required to pay under sub-section (1), the taxpayer may furnish to the ' Commissioner an estimate of the amount of the tax payable by him, and thereafter pay such estimated amount, as reduced by the amount, if any, already paid under sub-section (1), in equal instalments on such dates as have not expired.
11. A perusal of sub-section (1) of Section 147 reveals that it provides that every taxpayer subject to the provisions of sub-section (2) which provides that those individuals whose latest taxable income excluding the heads of income mentioned in the exclusions (a) to (d) provided in sub- section (1) is Rs. 500,000/- or more, shall be liable to pay advance tax. Sub-section (4) provides how the advance tax payable by a company or an association of persons shall be computed. Sub- section (4A) provides that the companies and association of persons shall estimate their tax payable for the relevant tax year at any time before the last installment is due and in case the find that the tax payable is likely to be more than the amount they are required to pay under the formula provided in sub-section (4) then the furnish an estimate of the amount of the tax payable by them and thereafter pay such amount after adjustment for the amount if any already paid in terms of sub-section (4), whereas sub-section (6) provides that if any taxpayer who was required to make payment of advance tax estimates before the last installment is due, than the tax payable by him for the relevant tax year is likely to be less than the amount required to be paid under sub- section (1), he may furnish to the Commissioner an estimate of the amount of the tax payable by him and thereafter pay such estimated amount. A comprehensive reading of sub-section (6) also leads to the conclusion that all taxpayers who are liable to pay advance tax under sub-section (1), are entitled to the benefit provided in this Section and companies and association of persons have not been excluded, from the benefit given to the taxpayers under this sub-section. What the Assessing Officer has done is that he wants to get the benefit of the sub-section (4-A) if taxpayer estimates that his tax is likely to be more than the tax payable under sub-section (4) but does not want to give benefit to the corporate taxpayer if he estimates that the tax payable by him for the relevant tax year is estimated to be less than the tax payable by him. We may also refer to sub- section (7) of Section 147 and Section 205 of this Ordinance which provide deterrents to the taxpayers for filing a wrong estimate under sub-section (6) as sub-section (7) of Section 147 provides that if there is any shortfall the same may be. Recovered from the taxpayer as if it was a tax due under an assessm ent order and Sub-section (1B) of Section 205 provides if the taxpayer fails to pay advance tax under sub-section (4A) or sub-section (6) of Section 147. Or the tax paid is less than ninety percent of the tax chargeable for the relevant tax year, he shall be liable to. Pay default surcharge at the rate of KIBQR plus, three percent per quarter:
12. It is an established principle of interpretation that no words may be added in a statute and no words may be deleted from it. If the intention of the legislature was that sub-section (6) was not to apply to corporate taxpayers then in our view the legislature after the words "any taxpayer" would have added the words "excluding companies and association Of persons", but since these words have not been added therefore the intention of the legislature is clear that benefit under sub- section (6) is available to all the taxpayers. It is therefore our considered view that the decision of the Income Tax Officer that corporate taxpayers do not fall within the ambit of sub-section (6) of Section 147 and therefore cannot file estimate of tax payable if such tax payable is less than the tax they are required to pay, is against the principles of interpretation and have rightly been rejected by both the appellate forums. We also tend to agree with the learned counsel for the' respondent that the controversy is whether a corporate taxpayer falls within the ambit of sub-section (6) of Section 147 and the questions have not rightly been framed.
13. The above are the reasons in support of our short order by which we had reframed the question as mentioned above and had answered the question in favour of the respondent and against the appellant, as a consequence of which we had dismissed both the reference applications in limine.